Three-property rule

A 1031 identification rule letting the taxpayer identify up to three replacement properties, regardless of value. The most-used of the three identification rules.

Taxes & insurance · Updated September 2026

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Part 1 of 4

Why a seller cares

In a 1031 exchange you can name up to three replacement properties, whatever their value, inside the 45-day window. It is the rule most exchangers use, and naming a fourth switches you to a different rule.

Part 2 of 4

A simple example

You sell a rental and identify three replacement buildings in writing on day 40. You close on one of them on day 120.

Three-property rule: a simple example
What you identifyWhich rule applies
Up to three properties, any valueThe three-property rule
Four or more, totaling under 200% of the saleThe 200% rule
Four or more over 200%The 95% rule, which almost nobody uses

Three names, in writing, by day 45. The rule is simple and the deadline is not flexible.

Part 3 of 4

What people get wrong

That you have to buy all three. Identification is a list of candidates; closing on one is enough.

Part 4 of 4 · where to read next

Where it appears in the sale

What a definition is, and what it isn't

Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.

Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish

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